Deed restrictions can be tough on new supermarkets

Several former grocery stores in Vallejo now house churches. One's been converted to a furniture store.

And these shifts are not because the neighborhoods already have a grocery store. Rather they are due to restrictions built into the properties' deeds that prevent a new market at those sites, city officials and a real estate expert said this week.

Though a matter of public record, the fact that six former Vallejo Safeway supermarket sites have deed restrictions prohibiting other supermarkets from operating there -- some for decades -- came to light recently when the WinCo Foods Environmental Impact Report was presented to the Planning Commission, real estate broker Fred Sessler said.

Former Safeway stores seem to be the only Vallejo properties with such deed restrictions, several city officials said. A Safeway spokeswoman said a specific explanation would require detailed research.

"Every situation is different," Safeway spokeswoman Susan Houghton said. "It's not an uncommon practice, but I would have to research each, individual site to tell you why the restriction was placed on it."

A self-described land detective, Sessler said learning that WinCo officials were prevented from selecting several possible alternate sites due to deed restrictions, set he and his son on a quest for more information. He found news reports from, for instance, Edmondton, Canada, where a similar situation involving 14 mostly former Safeway supermarket sites was reported.

"Their City Council wanted to do something about it, but the city attorney said they couldn't," Sessler said.

Safeway, which has been Vallejo's "dominant grocery store" since the 1930s, are "very fine merchants, and I guess (one's take on it) depends on if you believe in free enterprise," Sessler said. "In my opinion, it's usurping our own zoning ordinance. It takes away the city's rights to plan development on certain sites." These restrictions "impact on our urban decay situation," and contribute to "food desert areas in some cases," Sessler said.

The USDA defines a food desert as a low-income area with no grocery store within a certain radius.

Deed restrictions are perfectly legal, common nationwide and makes sense from the supermarket property owner's point of view, city officials said. Often, the grocery store is closing to relocate somewhere fairly nearby and doesn't want the competition, Associate Planner Bill Tuikka, Senior Community Analyst Annette Taylor and Economic Development Director Ursula Luna-Reynosa said.

Acting Planning Manager Michelle Hightower agreed "the owners have a right to place restrictions on their properties and the city can't do anything about it to my knowledge," though, "it does interfere with city's ability to plan."

Grocery store restrictions "can sometimes create a food desert because the location where the store had been is the only viable one for that type of store," Taylor agreed. "And the restrictions can last for decades and that does affect that neighborhood."

Though "understanding" the practice from the business' perspective, Taylor said she also sees "the effect it has on the community, which I think outweighs the effect it has on the store."

Luna-Reynosa echoed Taylor's frustration.

"Grocers are often the anchor tenant in such developments, and they want to prevent another grocery store coming in when they're there, and the restrictions often stay in place even once they leave," Luna-Reynosa said.

Luna-Reynosa said she realizes supermarkets are "in business to make a profit" and if a real demand exists, a food store could go in another location.

But, Luna-Reynosa said, with downtown Vallejo for instance, there may be space availability and other issues.

"When the infrastructure is there for a certain type of store, re-tenanting it to the same type of store makes it much easier, so, certainly (deed restrictions) are a constraint and make it more difficult, especially in these hard economic times," Luna-Reynosa said. "There's nothing the city can do about that -- it's a property rights type of arrangement -- so you focus on the things you can control. I try not to get to hung up on it."